Child care conundrum: Will a universal system pay off?

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Samantha McGavin’s son, Sascha Reinecke-McGavin, is a pretty happy child.


It’s an early December day, and the nine-month-old is bouncing on his mother’s lap, rolling around in her arms and reaching for anything that grabs his attention. He doesn’t know it yet, but he has only a few more months being at home all the time.

Like his older sister, four-year-old Astrid, Sascha was destined for day care when McGavin went back to work following her parental leave.

McGavin said she “felt extremely fortunate” to land a day care spot for Astrid three years ago after a “highly stressful” search. When she did get a space, it was at a good – but expensive – centre.

“It was more than our mortgage and really stretched us,” McGavin said, adding that such a high cost “is a huge disincentive for women to return to work.”

She’s exactly the kind of parent the federal NDP hopes to attract as it heads into the 2015 federal election.

Last fall, the New Democrats unveiled a major plank in their election platform by promising a universal child care system. That pledge yanked the child care agenda from the clutches of the Liberals, who had once promised a similar countrywide system. It also differentiated the NDP from the Conservatives, who prefer tax breaks and benefits to help parents with young families.

But is it the right thing to do, as policy?

For years, child care advocates have argued that a universal system is a good thing. Based on evidence to date, including studies of Quebec’s universal child care system, there’s at least some merit to their position. But it’s not clear-cut.


NDP leader Tom Mulcair, at a press conference in Ottawa in October, is proposing a national child-care program that he says would cost no more than $15 a day per child.

The economic return


Various analyses by academics, left-leaning think-tanks and more conservative groups such as TD Canada Trust estimate that for every $1 governments invest in child care, they recoup between $1.50 and $3 – a combination of tax revenue, reduced social assistance spending and GDP growth.

The economic arguments are thus: If child care becomes more affordable via a universal program, those who couldn’t afford it before will opt for the cheap care, then return to the labour market and increase their income. This is particularly true for women, who generally stay home with young children, although their labour-market participation has been increasing steadily over the past 10 years even without such a system in place.

In Quebec, the workforce participation rate of women aged 25 to 54 was 84 per cent in 2014, compared to 81 per cent in the rest of Canada. The higher participation in Quebec, economists believe, is due to access to affordable child care. (The Quebec government’s universal program currently costs about $7 a day, but those with higher incomes will be asked to pay more on their taxes this year, then see fees rise to as much as $20 a day when the province installs a sliding scale pay model in 2016.)

A 2005 study from Statistics Canada found that almost 40 jobs — the study doesn’t say whether those are full-time, part-time, or a combination of the two — were created for every $1 million governments invested in child care spending, a greater return than similar investments in retail, health care, manufacturing, construction, and oil and gas extraction.

The most widely cited study on the labour-market effects of the Quebec child care experiment comes from the University of Sherbrooke. That 2012 study calculated Quebec’s program allowed 70,000 more mothers to hold jobs in 2008 than would have been the case if no such program existed. That, in turn, translated into a four-per-cent increase in the number of female workers in the province, said lead author Pierre Fortin.

Translated to a national context, a four-per-cent increase in the number of female workers would mean an additional 309,954 Canadian women between the ages of 15 and 64 holding a job. (The calculation is based on the National Household Survey. In total, there were 16,022,995 employed Canadians in 2011, men and women aged 15 to 64, according to the NHS. Behavioural economists estimate the increase in overall work force participation would be between 250,000 and 360,000 Canadians, since some who could work would still choose to stay at home.)

Related


The increase in the number of women working, coupled with the multiplier effects of investing in child care, meant Quebec’s provincial GDP increased by 1.7 per cent in 2008 from what it could have been without the program in place. In dollars, the effect on Quebec’s GDP was an additional $6.5 billion in 2014, Fortin told a recent child care conference in Winnipeg. Fortin also said the estimated net financial benefit to the province of Quebec and federal government was about $1.2 billion in extra tax revenues on both income and consumption.

“The system pays for itself — it actually much more than pays for itself,” Fortin said.

But financial benefits, Fortin added as a caution, don’t necessarily make universal day care a good program.

A 2013 study from the German-based Institute for the Study of Labour, for instance, noted that some research has shown programs “generating large maternal employment effects tend to have negative short-run effects on child development.”

The statement referred to research done on behavioural outcomes in the Quebec child care system.

“Conversely,” the report said, “programs that produce little or no employment response” in the short-term — that is, parents not going to work while their child goes to day care“tend to have positive developmental and school-performance effects in the short-term as well as produce favourable long-run labour market outcomes” for the children involved.

In other words, the dollars may make sense, but that isn’t evidence that the child benefits.


Pre-school children play in the Centro Clinton Day Care Centre in Toronto.

The children’s progress


Research has shown that during the first few years of life, a child makes hundreds of new neural connections each second. The right stimulus at this early period of life can influence “social and economic success” for the child later in life, including better health and fewer instances of depression, the Council of Ministers of Education Canada said in a July 2014 position paper on early childhood learning.

OECD research has shown children who attended pre-school programs were a year ahead in math skills over those who didn’t attend a pre-school program when they were tested years later, at age 15.

Chris Pulfer says he has seen the benefits of a quality child-care setting. His daughter, Maya, who turned three in February, has come home with verbal and motor skills Pulfer wouldn’t even have thought about teaching her at home.

“Whereas we’re hanging out and having fun, they’re having fun (at the day care), but it’s structured,” Pulfer said. “To a two-year-old, it doesn’t seem structured … but there is a lot of theory and structure behind it.”

In 2009, a federally sponsored review of research into early childhood education found the most stimulating day care systems led to better cognitive and language development. The report from the (now defunct) Child Care Human Resources Sector Council also cited a 2008 American study that “programs with the largest and longest lasting effects are the most educationally intensive and expensive.

“There is widespread agreement in the academic literature that (early childhood education) programs tend to significantly improve cognitive abilities, future economic well-being and social outcomes for disadvantaged children. The literature also mainly agrees that (early childhood education) improves cognitive abilities and the future economic well-being of more advantaged children,” the review said.

“The literature is more divided on the effect of (early childhood education) on the socio-emotional development of children.”

The majority of the research reviewed found day care either had few or some positive effects on children’s emotional development.

But a minority of research reports concluded day care had negative effects on a child’s emotional development.

A 2008 study found children in the Quebec system actually showed slower development in their social and motor skills compared to the rest of Canada. As well, after the day care policy came into effect, Quebec children bucked a downward trend on hyperactivity and aggression that was occurring in the rest of Canada.

These findings, the researchers argued, could simply be the result of increased reports of bad behaviour that weren’t reported when parents themselves looked after their children.

The lead author of that study, Kevin Milligan, who has also served as an economics adviser to the federal Liberals, said children from low-income households showed improved social, cognitive and motor skills when in day care.

But as for children from middle-income households, the researchers couldn’t conclusively determine whether there would be any benefits from being in Quebec’s provincially funded day care.


Sascha Reinecke-McGavin is all smiles while hanging out with mom, Samantha McGavin, in their Ottawa home in December.

The future benefits


When the Citizen met Sascha, he was nine months old; now he’s just over one year of age. His sister, Astrid, has two decades before she is entrenched in her working life. Their early education today may pay off in the future financially for them.

A study in the United Kingdom released in September 2014 attempted to estimate what child care would mean in terms of lifetime earning potential. The calculations were based on following children 15 years removed from day cares to see where they were in high school, compared to a control group that didn’t go to day care. Based on the young people’s academic achievements, the researchers estimated their average increase in earning potential, discounting over 55 years the cost of the initial day care investment.

Converted to Canadian dollars, children who attend an average quality day care could earn about $51,500 more over their working lives than a child who had little or no early childhood education. (The U.K. study pegged working life as between ages 16 and 60, so the extra earnings – minus the original investment – amount to about $1,170 per year.)

The U.K. study also estimated that children attending a day care could help government coffers to the tune of about $21,000 per child in terms of extra taxes, less spending on social assistance programs, or a combination of the two, until age 60. The study also estimated that children who attended a high quality day care – in the top 20 per cent – would on average benefit the federal treasury about $9,500 more than a child who attended a low quality day care – in the bottom 20 per cent.

These numbers are far from a certainty. They are predictions based on existing data and don’t take into account other social inputs and qualitative measurements, such as motivation and perseverance, that can influence educational attainment and labour market success, according to a 2006 study from the Canadian Policy Research Networks.

The high-end projections for lifetime earnings for a child who attends day care would also mean that McGavin’s children would earn enough to cover the three-year costs for her to put them in child care. Parents, however, aren’t looking that far down the road: they’re trying to look into the immediate future.

McGavin was among a group of parents who in October sat down with NDP Leader Tom Mulcair at a child care meeting. She had heard the arguments for more spending – and she liked what he had to say.

“I feel like … as a citizen, (affordable child care) is a good thing for the economy, (and) it’s a good thing to do right by families with young children,” McGavin said.

jpress@ottawacitizen.com

Twitter.com/jpress

A glossary of child care terms


Child care: Care for children up to age five that can either be in the form of a home-based or centre-based service, and can include parents leaving their children in the care of others, including family members.

Day care: Any centre-based, or home-based service where parents leave their children for a specific period of time, usually during the working day. This service can be private, where parental fees and some government subsidies cover the cost of services, or publicly funded, where government funds cover the full cost of services.

Universal child care: A system where public funds cover the cost of child or day care, similar to health care. Advocates of such a system say it should be based on four principles: high quality, universally inclusive, accessible and programming that aids development.

Early childhood education: Education targeted towards children aged three to five that can be privately run, publicly run, and encompasses all day care, child care, preschool and kindergarten.

Subsidized day care: Refers to subsidies the provinces or municipalities provide to either providers or parents to defray some or all of the cost of child care. Subsidies usually target low-income earners and are means-tested.

Infant: Children up to 18 months of age. These spaces in day care are the most costly because of the low staff-to-child ratios, and are also the most difficult to find across Canada.

Toddler: Children between 18 months and three years of age. These spaces are cheaper than infant spaces, but more expensive than a space for pre-schoolers. Across Canada, there are twice as many toddler spaces as infant spaces.

Pre-schooler: Children aged three to five. These usually represent the cheapest child care spaces.

Public child care: Refers to state-run day care facilities. These are limited to after-school programs and a small number of programs run by municipal and regional governments.

Publicly funded child care: Refers to government funding for child care, either through fee subsidies to low-income families, or grants to service providers.

Private day care: Any day care that is not run by government. The vast majority of child care centres in Canada, be they non-profit or for-profit, are privately run. They may or may not receive government subsidies.

For-profit child care: Are run as a business either by a corporation, or an independent operator. The owner tends to make decisions about operations, including what to do with any profit.

Non-profit child care: Are run as a business overseen by a board of directors, usually made up of parents. The board decides how to spend any budgetary surplus.

Regulated child care: Refers to child care services regulated by a provincial or territorial licensing regime. Standards vary, but usually include limits on child-to-staff ratios, training requirements for staff, and are subject to regular inspection by provincial workers.

Unregulated child care: Small centres provinces allow to operate informally, such as care by relatives, babysitters or nannies. Unregulated day cares are not subject to provincial standards or inspections, and investigations are usually the result of complaints.

(Sources: Library of Parliament, Canadian Centre for Policy Alternatives, Childcare Resource and Research Unit)

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